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Shared Services
refers to the provision of a service by one part
of an organization or group where that service
had previously been found in more than one part
of the organization or group. Thus the funding
and resourcing of the service is shared and the
providing department effectively becomes an
internal service provider. The key is the idea
of 'sharing' within an organization or group.
Shared Services is similar to collaboration
which might take place between different
organizations such as a Hospital Trust or a
Police Force. For example adjacent Trusts might
decide to collaborate by merging their HR or IT
functions.
Shared Services is different from the
diametrically opposite model of Outsourcing
which is where an external third party is paid
to provide a service that was previously
internal to the buying organization, typically
leading to redundancies and re-organization.
There is an on-going debate about the advantages
of Shared Services over outsourcing.[1][2][3] It
is sometimes assumed that a joint venture
between a government department and a commercial
organization is an example of Shared Services
but in fact they are quite different. The joint
venture involves the creation of a separate
legal commercial entity (jointly owned) which
provides profit to its shareholders. It is
difficult to see what is being shared rather
than bought. Such joint ventures are really a
form of outsourcing.
One purpose of Shared Services is the
convergence and streamlining of an
organization’s functions to ensure that they
deliver to the organization the services
required of them as effectively and efficiently
as possible. This often involves the
centralizing of back office functions such as HR
and Finance but can also be applied to the
middle or front offices. A key advantage of this
convergence is that it enables the appreciation
of economies of scale within the function and
can enable multi function working (e.g. linking
HR and Finance together), where there is the
potential to create synergies.
A large scale cultural and process
transformation can be a key component of a move
to Shared Services and may include redundancies
and changes of work practices. It is claimed
that transformation often results in a better
quality of work life for employees although
there are few case studies to back this up.
Shared Services are more than just
centralization or consolidation of similar
activities in one location. Shared Services can
mean running these service activities like a
business and delivering services to internal
customers at a cost, quality and timeliness that
is competitive with alternatives..
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